Mesenchymal stem cells (MSCs) from adult somatic tissues may differentiate in vitro and in vivo into multiple mesodermal tissues including bone, cartilage, adipose tissue, tendon, ligament or even muscle. MSCs preferentially home to damaged tissues where they exert their therapeutic potential. A striking feature of the MSCs is their low inherent immunogenicity as they induce little, if any, proliferation of allogeneic lymphocytes and antigen-presenting cells. Instead, MSCs appear to be immunosuppressive in vitro. Their multilineage differentiation potential coupled to their immuno-privileged properties is being exploited worldwide for both autologous and allogeneic cell replacement strategies. Here, we introduce the readers to the biology of MSCs and the mechanisms underlying immune tolerance. We then outline potential cell replacement strategies and clinical applications based on the MSCs immunological properties. Ongoing clinical trials for graft-versus-host-disease, haematopoietic recovery after co-transplantation of MSCs along with haematopoietic stem cells and tissue repair are discussed. Finally, we review the emerging area based on the use of MSCs as a target cell subset for either spontaneous or induced neoplastic transformation and, for modelling non-haematological mesenchymal cancers such as sarcomas.